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Earnings in line; leverage high

Increased capacity target to 30mtpa by FY26 vs. 26mtpa earlier

* TRCL’s 1QFY25 EBITDA was in line with our estimate as lower-thanestimated opex/t offset lower-than-estimated volume. EBITDA came in at INR3.2b (est. INR3.1b), while EBITDA/t stood at INR733 (est. INR679). OPM was flat at 15% (est. 14%). PAT stood at INR355m (est. INR345m).

* The management has increased its capacity target to 30mtpa by FY26 vs. the earlier estimate of 26mtpa. Currently, TRCL is expanding its clinker/grinding capacities at the Kurnool plant in Andhra Pradesh by 3.15mt/1.5mtpa (brownfield expansion). It further plans to add capacities through debottlenecking and expansion of grinding capacities at exiting locations with a minimal capex. It has taken effective steps to monetize certain noncore assets worth INR10b in the next one year.

* We cut our EBITDA/EPS estimates by 6%/11% for FY25 due to persistently weak prices in its core market. We maintain our estimates of FY26/FY27. We value TRCL at 12x Jun’26E EV/EBITDA to arrive at a TP of INR890. We reiterate our Neutral rating on the stock.

Volume inches up ~1% YoY; opex/t down 8% YoY

* Revenue/EBITDA/PAT stood at INR20.9b/INR3.2b/INR355m (down 7%/6%/ 55% YoY and down 6%/up 2%/3% vs. our estimates) in 1QFY25. Sales volume inched up 1% YoY to 4.36mt (5% below estimates).

* Realization at INR4,792/t (declined 8% YoY) was in line with our estimate. Opex/t declined ~8% YoY, mainly led by a fall in variable costs (down ~15%). Freight costs/t remained flat, while other expenses/t increased 1% YoY. OPM remained flat YoY at ~15% (est. 14%) and EBITDA/t was down 8% YoY at INR733 (est. INR679).

* Depreciation/interest costs increased 13%/21% YoY due to commissioning of new capacity in 1HCY24. Other income grew ~8% YoY.

Highlights from the management commentary

* Cement demand was affected by elections and monsoon. However, demand outlook is positive in Andhra Pradesh with the new government in power. Cement prices are under pressure across TRCL’s key markets.

* Blended fuel consumption cost was USD137/t (INR1.49/kcal) vs. USD141 (INR1.65/kcal) in 4QFY24.

* The management maintained its FY25 capex guidance of INR12b. Capex stood at INR2.81b in 1Q. Net debt stood at INR49.8b vs. INR48.2b as of Mar’24. The net debt-to-EBITDA ratio stood at 3.8x vs. 3.1x as of Mar’24.

View and valuation

* We estimate the company’s volume growth to moderate to ~7% CAGR over FY24-27 vs. ~23% over FY21-24. Pricing pressure in its key markets, higher leverage, and low return ratios (RoE/ROCE estimated in mid-single digits in FY25) will keep stock price range-bound.

* At CMP, the stock trades at 13x/11x FY25E/FY26E EV/EBITDA. We value TRCL at 12x Jun’26E EV/EBITDA and reiterate our Neutral rating with a TP of INR890.

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